Mitigating risk a competitive advantage, potential life-saver

Unlike the term "security," which many automatically associate with guns, bullets, and barriers, risk mitigation incorporates numerous principles ranging from training and staff preparation to cultural awareness and even corporate social responsibility.

When a society is properly engaged by a company, even the most hostile environments can be rendered much safer for employees.

The energy sector has long operated in violent and unstable hotspots around the world and is no stranger to many hazards, be it unrest, pipeline bombings, abductions, or rising crime. In response to these ongoing problems, the energy sector has continued to lead the way in developing safe working practices for its staff, building on the strong culture of HSE practices first implemented for employees in the North Sea.

During the Libyan crisis, companies found that having an established security framework in place along with appropriate training gave employees options to choose from during the crisis and helped ease their concerns. (Photos courtesy of AKE)

What is important to note is that risk mitigation does not simply help prevent accidents or harm. It also can save or help earn money. For instance, staff who have undergone risk mitigation training are more confident at working in emerging markets, thus allowing a company to expand its operations in lucrative but potentially hazardous environments rather than pulling out and missing the opportunities.

Framework to overcome fear

A company with an office in Nigeria, for example, reported a high level of fear among its expatriate staff in 2011. The main source of concern was the rising risk of terrorist attack by Boko Haram, a radical group responsible for a string of bombings and shootings over recent months. The company in question had received specific threats from the group, and paranoia was building among employees.

However, on inspection it was realized that the company had no evacuation plans in place at the facility. With a relatively short amount of training and preparation, the company was provided with options to choose from in the event of a future crisis. Key escape routes and possible nearby safe havens were identified, and staff members ran a series of practice drills to ensure that all employees would be able to deal with the situation in the event that conditions deteriorated.

Simply having this framework in place considerably boosted confidence at the facility. Workers had far less trepidation about returning from leave, and the company head office no longer struggled to obtain appropriate staff for the tasks at hand. No crisis has yet affected the company's operations in Nigeria, but the plans had an immediate impact on morale and the working environment at the office, improving productivity and allowing the company to increase its presence in what remains a highly lucrative market. At a time when the company's competitors were actively reducing their activity in the country, risk mitigation allowed it to expand and even exceed its initial business objectives.

Reducing reliance on firearms

In some of the most hazardous environments, proper risk mitigation techniques also can help reduce a company's reliance on firearms for protection.

A destroyed tank in Libya is a stark reminder of the security dangers that oil and gas industry personnel face in areas of domestic upheaval.

At this time, it is being widely cited in the media that no vessel carrying armed guards has been hijacked by Somali pirates. However, the less reported statistic is that no vessel with properly trained crew and nonlethal risk mitigation measures has been taken either. Alert crew members are far more likely to spot approaching pirates and enact appropriate evasive procedures than untrained crew.

Nonlethal measures also are significantly cheaper per voyage. It is far more globally effective and considered a less hazardous or legally murky means of dealing with piracy than simply placing armed guards on deck.

As well as planning and training, there are numerous simple and cost-effective measures that companies can implement, with recent cases demonstrating just how effective they can be.

Libyan crisis

The energy sector was caught up in a fast-paced and highly dangerous crisis when Libyan airspace was closed in early 2011. Amid rapidly deteriorating conditions in the country, the first priority for most companies was to ensure the safety of personnel and protection of assets. However, what quickly became apparent was how costly this was going to be for the organizations caught off guard. When the situation began to destabilize, some companies began to remove nonessential expatriate staff. Those that failed to do so had to pay the full cost of extracting almost all of them when the country descended into conflict. With a dire shortage of flights, prices quickly mounted, not least because a number of the few available planes were block-booked by the highest bidders.

By this stage, any armed security or high fences mattered little to the expatriates caught up in the situation,

particularly those stuck in compounds in the middle of the Sahara. In fact, companies that relied on security measures and an evacuation provider were often much worse off than those that took alternative, more creative approaches to protecting their interests. Expatriate staff who had undergone training on how to survive in hostile regions were often more resourceful and calm under the immense pressure of the situation.

Companies that employed Libyan nationals from the local area also did relatively well. Firstly, these individuals did not have to be evacuated. Secondly, the provision of local employment meant that the community surrounding a company's business activities was far more likely to defend it from bandits and opportunistic looters. Some local communities protected company assets until hostilities were largely over. The fact that these businesses provided local employment meant that residents from the local community had far greater intent to ensure the safety of the business because they had a mutual interest in keeping it running.

For many, the notion of security conjures up images of armed guards, vehicle convoys, and tall fences. However, the Libya case demonstrated that such defenses can sometimes be entirely superfluous. In many cases, such measures can even be regarded as reactionary, aggressive, and inflammatory.

Armed motorcades

In 2003, as the dust settled in post-invasion Iraq, a plethora of security companies sprang into action, recruiting ex-military personnel and amassing droves of armored vehicles to escort clients around in convoys.

Many of these armed and high-profile motorcades were characterized as driving aggressively and were perceived as taking a "shoot first, ask questions later" approach. The subsequent congestion, car accidents, and horrific civilian casualties that came about as a result of their actions stoked massive resentment from the Iraqi public.

This in turn resulted in a rise in militant attacks against both the security contactors and their clients. More than 300 civilian contractors were killed in Iraq between 2003 and 2011. Evidently, if a company responds to a risk by deploying armed guards and putting up physical barriers automatically, it not only reduces its profit margin but in some cases can actually increase the level of risk.

As was the case in Libya, the employment of local nationals has reaped numerous benefits for companies working in Iraq. First of all, Iraqi staff blend in far more than foreigners. This instantly makes them less likely to be targeted by opportunist criminals or militants. Their local knowledge and cultural awareness also make them far more efficient at operating on the ground. They are much better informed and can quickly assess fluid and often dangerous situations and help company decision-makers plan activities with sensitivity and invaluable practical guidelines.

Local nationals also are not subjected to the same visa difficulties constraining the many foreign workers looking to get into the country at present. Domestic staff turnover also tends to be lower than that with expatriate workers. This can significantly reduce the cost of employee training and means that companies can develop a highly efficient domestic staff base in a country. Companies that employ local nationals also will face fewer difficulties when anticipated local content laws, similar to those in place in Saudi Arabia, come into action further down the line.

Risk mitigation a competitive advantage

If applied correctly, risk mitigation techniques can help protect employees, improve morale, safeguard investments, and maintain an organization's reputation and integrity. While this is an obvious goal for risk and HSEQ managers, the implementation of protective techniques can sometimes conflict with the demands set by chief financial officers. However, the benefits of protecting employees from harm cannot be argued with. Neither can it be argued that accidents or harm to a company's personnel, property, or reputation are in any way "cheap" or worth the cost. Litigation, compensation, and business interruption are all expensive.

Risk mitigation should therefore not be seen as a cost center but as a competitive advantage, one that can be applied to markets and areas of potential lucrative opportunities the world over.